Micro Ch_7 Vocabulary Review Quiz

Accounting profit is defined as:

• The total revenue minus explicit costs.

• The total revenue minus implicit costs.

• The total revenue minus both explicit and implicit costs.

• The total revenue minus taxes.

What is the definition of average profit?

• The total revenue minus total expenses.

• The total profit divided by the number of units sold.

• The total cost of production.

• The difference between the highest and lowest profit.

What does average total cost (ATC) mean?

• The cost of producing one additional unit of output.

• The total cost divided by the quantity of output produced.

• The difference between total revenue and total cost.

• The cost that does not change with the level of output.

What does average variable cost (AVC) refer to?

• The total cost divided by the quantity of output produced.

• The fixed cost per unit of output.

• The variable cost per unit of output.

• The sum of fixed and variable costs.

What are constant returns to scale?

• A situation where increasing the input results in a proportional increase in output.

• A situation where increasing the input results in a less than proportional increase in output.

• A situation where increasing the input results in a more than proportional increase in output.

• A situation where increasing the input results in no change in output.

Depreciation in economic terms refers to:

• The increase in value of an asset over time.

• The decrease in value of an asset over time.

• The process of buying new assets.

• The appreciation of currency value.

Diminishing marginal productivity refers to the phenomenon where adding an additional factor of production results in:

• An increase in total output at an increasing rate

• An increase in total output at a decreasing rate

• A decrease in total output

• No change in total output

Diseconomies of scale refer to the situation where:

• a firm's average costs decrease as it produces more output.

• a firm's average costs remain constant as it produces more output.

• a firm's average costs increase as it produces more output.

• a firm's total costs decrease as it produces more output.

Economic profit is defined as the difference between total revenue and what?

• Total cost including both explicit and implicit costs

• Total cost including only explicit costs

• Total revenue and total expenses

• Total revenue and total taxes

Economies of scale refer to the cost advantages that enterprises obtain due to their scale of operation, with cost per unit of output generally decreasing with increasing scale as fixed costs are spread out over more units of output.

• True

• False